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Intro to Business > midterm practice test > Flashcards

midterm practice test Flashcards

1
Q

a $100 tax credit reduces your tax more than a $100 tax deduction does

  • true
  • false
A

true

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2
Q

a(n) ____ is a short, specific written declaration of the reason a business exists and what it wants to achieve

  • statement of intent
  • affirmation of purpose
  • mission statement
  • declaration of principle
A

mission statement

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3
Q

the differences between actual and budgeted performance, called ___, allows managers to spot problems before they become serious

  • profits
  • losses
  • discrepancies
  • liabilities
A

discrepancies

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4
Q

a current ratio of 2:1 means that the value of current assets is twice as much as the value of current liabilities

true or false

A

true

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5
Q

true or false

consumers are individuals and organizations that determine what products and services will be available for sale

A

false

consumers decide what products and services will be bought

producers decide what will be for sale

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6
Q

which of the following is not a fundamental principle that guides the effective organization of work?

  • accountability
  • responsibility
  • authority
  • moderation
A

moderation

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7
Q

the ____ shows how much profit is being made by each dollar of sales for the period being analyzed

  • net income ratio
  • current ratio
  • return on equity ratio
  • debt to equity ratio
A

net income ratio

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8
Q

a ____ represents a unit of ownership in a corporation

  • corporate bond
  • certificate of deposit
  • share of corporate stock
  • mortgage
A

share of corporate stock

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9
Q

true or false

an entrepreneur is an economic resource

A

true

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10
Q

one important advantage of forming a partnership is that this form of business organization gives each owner sole control over the business

  • true
  • false
A

false

they share control over the business

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11
Q

a bond represents a debt for an organization

true or false

A

true

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12
Q

when the company is operating at a loss, the total expenses listed ont he income statement will be ____

  • less than the total revenue
  • more than the total revenue
  • less than the total assets
  • more than the total assets
A

more than the total revenue

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13
Q

each of the following is one of the three economic questions that must be answered by all nations except:

  • what goods and services will be produced
  • how will the goods and services be produced
  • who will receive the profits earned when goods and services are produced
  • what needs and wants will be satisfied with the goods and services produced
A

who will receive the profits earned when goods and services are produced

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14
Q

without personal savings, businesses could not carry out capital projects

true or false

A

false

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15
Q

which of the following is not one of the six basic activities that all businesses perform?

  • raising capital
  • buying goods and services
  • conserving resources
  • generating ideas
A

conserving resources

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16
Q

service businesses are the fastest growing part of the US economy

  • true
  • false
A

true

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17
Q

unity of command means there is _____

  • a single person in charge of a business
  • an overall plan that tells each employee what to do
  • a clear reporting relationship for all staff of a business
  • a way for ideas to flow from employees to managers
A

a clear reporting relationship for all staff of a business

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18
Q

true or false

deflation has occurred in the US

A

true

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19
Q

technology has allowed people to work fewer hours

  • true
  • false
A

false

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20
Q

XYZ Company produces and sells five products. People who specialize in production and marketing are assigned to each product. XYZ company has a ____ organization structure.

  • unity of command
  • functional
  • matrix
  • corporate
A

matrix

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21
Q

when you purchase a corporate bond, you become one of the corporation’s ___

  • owners
  • creditors
  • equity holders
  • borrowers
A

creditors

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22
Q

in a ____ the resources are owned and controlled by the government

  • command economy
  • traditional economy
  • market economy
  • mixed economy
A

command economy

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23
Q

the ____ tells you if the business will be able to pay its debts whent hey are due

  • current ratio
  • debt to equity ratio
  • return on equity ratio
  • net income ratio
A

current ratio

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24
Q

jamal’s family has assets of $250,000, including $160,000 of value in their home. the family has $80,000 in liabilities. what is the family’s net worth?

  • $10,000
  • $170,000
  • $330,000
  • $490,000
A

$170,000

250000-80000=170000

(trick question because you don’t use the 160000)

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25
Q

a mortgage or rent payment is a(n) ____

  • fixed expense
  • variable expense
  • personal asset
  • deficit
A

fixed expense

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26
Q

the easiest form of business to start and end is a(n) ____

  • limited liability partnership
  • S corporation
  • franchise
  • proprietorship
A

proprietorship

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27
Q

a ____ occurs when a government spends less than it takes in

  • budget deficit
  • budget shortage
  • budget over run
  • budget surplus
A

budget surplus

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28
Q

which of the following is an example of a service?

  • the shingles that are used to put a new roof on your home
  • the effort of the worker you hire to put a new roof on your home
  • the hammer that is used to install the new shingles on your home
  • the increased value of your home after a new roof is installed
A

the effort of the worker you hire to put a new roof on your home

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29
Q

in what type of business organization is each owner personally liable for all business debts, even if the debts were created by other owners?

  • corporation
  • partnership
  • proprietorship
  • S corporation
A

partnership

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30
Q

when preparing a cash flow statement, include ____ under Cash Inflows

  • a gross pay before taxes and deductions
  • gross pay less taxes only
  • net income or take home pay
  • interest on mortgage
A

net income or take home pay

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31
Q

true or false

when there are many competitors in a market, individual businesses are not able to easily raise their prices

A

true

if one company raises the price of the item, people will buy that same item from another company

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32
Q

groups of people form consumer cooperatives to ___

  • purchase goods and services more cheaply than they could as individuals
  • reduce the amount of property taxes that each member must pay
  • generate a profit for each member of the group
  • increase their political power in their community
A

purchase goods and services more cheaply than they could as individuals

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33
Q

most US businesses have no employees other than the owner

  • true
  • false
A

true

more than 72% of US businesses employ only the owner

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34
Q

a current ratio of 1:2 represents an unhealthy business situation

true or false

A

true

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35
Q

an employee using direct deposit will receive a paycheck printed electronically to take to the bank

  • true
  • false
A

false

only recieve a paystub, do not have to take anything to the bank

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36
Q

if you want to save money at a savings institution, you would be most interested in the ____

  • prime rate
  • discount rate
  • certificate of deposit rate
  • t-bill rate
A

certificate of deposit rate

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37
Q

current liabilities are amounts owed by the business that will be paid off within two years

  • true
  • false
A

false

will be paid off within one year

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38
Q

physicians, web designers, and furniture movers are ____

  • intermediaries
  • nonprofit corporations
  • manufacturers
  • service businesses
A

service businesses

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39
Q

a manager who supervises inexperienced employees can have a greater span of control than one who supervise experienced employees

  • true
  • false
A

false

managers supervising inexperienced employees have to watch them and help them more than those whose supervise employees that are experienced

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40
Q

policies are descriptions of the way work is to be done

  • true
  • false
A

false

41
Q

____ refers to the quantity of a good or service that businesses are willing and able to provide

  • supply
  • demand
  • scarcity
  • trade off
A

supply

42
Q

consumer debt includes each of the following except ____

  • unspent consumer income
  • home mortgages
  • unpaid credit card balances
  • auto loans
A

unspent consumer income

43
Q

gross domestic product (GDP) is the dollar value of all ____

  • final goods and services produced in a country during one year
  • goods and services produced in a country during one year
  • intermediate and final goods and services produced in a country during one year
  • final goods and services produced in, or imported to, a country during one year
A

final goods and services produced in a country during one year

44
Q

all of the following can increase productivity except ____

  • improved technology
  • better training for workers
  • improved management techniques
  • increased wages for workers
A

increased wages for workers

45
Q

the consumer price index (CPI) is a measure of ____

  • inflation
  • consumer debt
  • retail sales
  • interest rates
A

inflation

46
Q

the right side of the balance sheet lists ____

  • liabilities
  • assets
  • owners equity
  • liabilities and owner’s equity
A

liabilities and owners equity

47
Q

true or false

debt is harmful to a company

A

false

48
Q

in a market economy, a marketplace is always a physical location where economic transactions take place

true or false

A

false

think of amazon - you can’t go to their physical location to buy stuff

49
Q

____ records identify the amount assets have decreased in value due to their age and use

  • asset
  • depreciation
  • accounts receivable
  • accounts payable
A

depreciation

50
Q

actual sales and expenses for a specific period are reported on the ____

  • operating budget
  • balance sheet
  • income statement
  • payroll record
A

income statement

51
Q

when many more people wish to purchase a product, its price will tend to ____

  • stay the same
  • fall
  • decline only to rise again
  • increase
A

increase

52
Q

the ____ is the interest rate that banks make available to their best business customers

  • discount rate
  • corporate bond rate
  • morgage rate
  • prime rate
A

prime rate

53
Q

revenue minus expenses equals ____

  • total assets
  • total liabilities
  • owner’s equity
  • profit or loss
A

profit or loss

54
Q

on a family budget, the savings category is listed as a(n)

  • asset
  • income
  • expense
  • variable
A

expense

55
Q

a business with a debt to equity ratio of 3:1 may have trouble borrowing additional funds from a bank

true or false

A

true

56
Q

market price is determined by all of the following except

  • competition
  • opportunity cost
  • demand
  • supply
A

opportunity cost

57
Q

a producer that mines coal is a(n)

  • wholesaler
  • extractor
  • manufacturer
  • retailer
A

extractor

58
Q

the primary reason why businesses invest resources and take risks is to ___

  • provide jobs
  • produce goods and services
  • improve their products
  • earn a profit
A

earn a profit

59
Q

a ____ must name a board of directors that will make the major policy and financial decisions for the business

  • limited liability company
  • proprietorship
  • corporation
  • limited liability partnership
A

corporation

60
Q

an excise tax is a type of tax on ____

  • purchases
  • property
  • wealth
  • earnings
A

purchases

61
Q

gross domestic product (GDP) per capital is calculated by ___

  • dividing GDP by the total population
  • multiplying GDP by the total population
  • dividing GDP by the Consumer Price Index
  • multiplying GDP by the Consumer Price Index
A

dividing GDP by the total population

62
Q

a demand curve illustrates the relationship between quantity demanded of a product and ____

  • quantity supplied
  • price
  • profit
  • production costs
A

price

63
Q

which of the following is not a principle upon which the US economic system is based?

  • private property
  • freedom of choice
  • government regulation
  • competition
A

government regulation

64
Q

if owners have total equity of $1,000,000 in the business and the business has net income (profit) of $10,000, the return on equity is _____

  • 10%
  • 1%
  • 0.1%
  • 100:1
A

1%

10000/1000000=.01 then change to % by moving decible over 2 spots

to check: 1000000x1%=10000

65
Q

what tool for money management is a plan for spending and saving income?

  • balance sheet
  • budget
  • cash flow statement
  • financial plan
A

budget

66
Q

on a balance sheet, the value of your home is listed under ____, while the amount you still owe on your home mortgage is listed under ____

  • assets; liabilities
  • liabilities; assets
  • net worth; liabilities
  • liabilities; net worth
A

assets; liabilities

67
Q

a functional organizational structure is a diagram that shows the structure of an organization, classifications of work and jobs, and the relationships among those classifications

  • true
  • false
A

false

68
Q

examples of long term assets are ____

  • inventory and accounts receivable
  • buildings and equipment
  • mortgage debt and accounts payable
  • none of these choices
A

buildings and equipment

69
Q

financing requirements for a major business expansion are based on the ____ budget

  • start up
  • operating
  • cahs
  • business
A

start up

70
Q

over the past 50 years, the proportion of women who work outside the home has ____

  • stayed almost the same
  • grown very slowly
  • declined slightly
  • grown significantly
A

grown significantly

71
Q

true or false

the US is the largest producer of goods and services int he world

A

true

72
Q

most disability income insurance will pay ___

  • 80 - 90% of your salary
  • 60-70% of your salary
  • 100% of your salary
  • 100% of your salary plus all medical expenses related to your disability
A

60-70% of your salary

73
Q

the amount of social security benefits a retiree receives each month depends on ___

  • how much the retiree saved while employed
  • how much the retiree earned while employed
  • the retiree’s need
  • the amount of the retiree’s pension
A

how much the retiree earned while employed

74
Q

the recurring ups and downs of gross domestic product (GDP) in an economy is called the _____

  • stock market
  • bond market
  • money cycle
  • business cycle
A

business cycle

75
Q

economic decision making is the process of deciding _____

  • how to spend your time
  • how to use your income
  • which needs and wants will be satisfied
  • whether to buy products now or later
A

which needs and wants will be satisfied

76
Q

money management means never spending, doing without things, and not having any fun

  • true
  • false
A

false

77
Q

an estate tax is paid ____

  • at the time of purchase
  • on a specific due date
  • when a person dies
  • once or twice a year
A

when a person dies

78
Q

if you want to itemize deductions, you must use Form ____

  • 1040A
  • W-2
  • 1040
  • 1040EZ
A

1040

79
Q

sources of information to help build a budget for a new business include all except ____

  • past financial records
  • the small business administration (SBA)
  • published financial information on similar businesses
  • professional associations
A

past financial records

80
Q

what is the formula for calculating owner’s equity?

  • total assets minus total liabilities
  • total revenue plus total assets
  • current assets plus long term assets
  • total revenue minus total expenses
A

total assets minus total liabilities

81
Q

if intermediate goods were counted as a part of gross domestic product (GDP), the value of these goods would be counted twice

true or false

A

true

82
Q

FICA refers to ____

  • unemployment taxes
  • social security and medicare taxes
  • income taxes
  • payroll taxes
A

social security and medicare taxes

83
Q

all people above 16 who are actively working or seeking work make up the ____

  • unemployment rate
  • creditor pool
  • labor force
  • labor organization
A

labor force

84
Q

most nations of the world can be classified as having a ____

  • command economy
  • market economy
  • traditional economy
  • mixed economy
A

mixed economy

85
Q

in preparing your income tax return, you may itemize deductions and take a standard deduction

  • true
  • false
A

false

you can only take one or the other - so take either the deductions on what you itemize or the standard deduction

86
Q

the first step in the decision making process is to _____

  • identify the choices
  • define the problem
  • evaluate advantages and disadvantages of each choice
  • review your decision
A

define the problem

87
Q

with a traditional individual retirement account (IRA)

  • contributions are tax deductible
  • investment gains are tax deferred
  • funds may be withdrawn without penalty after age 59-1/2
  • all of these choices
A

all of these choices

88
Q

you do not have to pay tax on ____ income

  • tax deferred
  • earned
  • tax exempt
  • investment
A

tax exempt

89
Q

____ are precise statements of results a business expects to achieve

  • goals
  • policies
  • strategies
  • articles of incorporation
A

goals

90
Q

if you are an employee of a company, your net pay is ____

  • the same as your gross pay
  • your gross pay minus deductions
  • your gross pay minus deductions minus tax withholding
  • your gross pay minus deductions minus tax withholding minus direct deposit
A

your gross pay minus deductions minus tax withholding

91
Q

suppose you are preparing your federal income tax return for the year 2012. what is deadline for filing this return?

  • january 1, 2012
  • january 1, 2013
  • april 15, 2012
  • april 15, 2013
A

april 15, 2013

92
Q

true or false

the basic economic problem results from scarcity

A

true

93
Q

____ include tools and equipment used to produce goods and services

  • natural resources
  • human resources
  • capital resources
  • consumer resources
A

capital resources

94
Q

your checkbook and bank statements are an effective budgeting system

  • true
  • false
A

false

95
Q

true or false

there has never been a true depression in the US

A

false

96
Q

____ is a period in which demand begins to decrease, businesses lower production, unemployment begins to rise, and GDP growth slows for two or more quarters of the calendar year

  • depression
  • deflation
  • recession
  • recovery
A

recession

97
Q

true or false

things that are required in order to live are wants

A

false

they are needs

98
Q

a budget variance

  • is a difference between budgeted and actual spending
  • may be a deficit
  • may be a surplus
  • all of these
A

all of these

99
Q

the process of good money management should start with knowing your current financial status

  • true
  • false
A

true

Intro to Business (41 decks)

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